Consumer Confidence Holds Up While Economic Storm Clouds Gather

Consumers are feeling all right for now — but the future is still iffy.

The Conference Board’s Consumer Confidence Index slipped to 102.3 for May, down slightly from 103.7 in April, but ahead of the 99.8 reading economists projected, according to FactSet.

However, the monthly survey continued to show a big divide between how consumers are feeling now and how they expect to be feeling in six months.

The Present Situation Index fell to 148.6 from 151.8 last month while the The Expectations Index declined to 71.5 from 71.7.

If that reading of consumer expectations counts as shopping storm clouds, they’ve been on the horizon for a while. With the exception of one month, the Expectations Index has been below 80 since February 2022 — a level associated with a recession in the next year.

But for now, consumers seem to be living very much in the present.

The Census Bureau’s April reading of retail and food service sales rose 1.6 percent from a year earlier despite inflation, the bank crisis and fears of recession.

And as of now, it appears the U.S. economy will avoid the nightmare scenario of a debt default as Washington lawmakers start to push a compromise deal through.

“Right now, consumer attitudes represent a tug-of-war between constant gloom and doom in the press — and from most economists — versus the reality of a 3.4 percent unemployment rate,” said Stephen Stanley, chief U.S. economist at Santander. “Inflation does not feel good for anyone and has dampened confidence…[but] in contrast to the confidence numbers, consumer spending has unequivocally remained solid and should continue to do so for the time being.”